Paulson Bailout: Didn't You Already Get Your Mulligan

Have we not learned anything from the S&L debacle 20
years ago in which taxpayers had to assume all the bad debt through the
Resolution Trust Corp? Instead of
the FDIC playing the role of enabler by guaranteeing deposits and encouraging
growth in the commercial and industrial development markets of the 1980’s, we
had banks lending far more money against U.S. residential property than
historical norms and prudence required.

This proposed solution is the most expensive bailout in the
nation’s history, completely curtailing the ability of the next president to
push for tax cuts or new spending. And Paulson couldn’t or wouldn’t even answer
whether this bailout would cover defaulted college loans and credit card
faults.

Let’s be realistic, the $700b the government wants to avoid
an “imminent meltdown of the U.S. financial system” will probably be double
that. The Bailout Plan says give the Secretary of Treasury $700,000,000,000 to
purchase mortgage-related assets from any financial institution headquartered
in the U.S. and not have any judicial or administrative review of its handling.
Better yet, they don’t even plan to create an entity to handle the money, just
hire a few more ‘authorities’ to manage it.

So we should hand over a blank check to the government, the
same government that lied to us about reasons for war, to buy assets at
“hold-to-maturity” prices instead of the “firesale” prices. Which means instead
of forcing the banks to sell their loans at severely distressed prices pay the
price of what the loans would be worth down the road. This allows the banks to
dump assets at prices more favorable to them. And, the banks are only going to
sell assets they think the government is over paying, otherwise, why would they
sell them?

Which, additionally means, if the banks were really in
trouble they would be willing to sell their assets at anything they could get
for it. Apparently, Paulson and Bernanke want to go in pre-maturely hoping that
cleaning up the bank’s balance sheet will quickly fix the housing market. Is
this bailout really going to loosen credit and open up the banks to more
lending? Are these new loans going to soak up all the excess housing inventory?

To me it seems more of a Wall Street bailout. They were the
ones who created this mess by manufacturing a
trillion dollar sub-prime industry, and then passing off that risk onto a
multitude of third-party investors. As a matter of fact, I’ll go as far as
saying that Wall Street is blackmailing Congress.

Everything in the U.S. is tied to
the price of stock. And I don’t believe our stock market is a ‘free market’ but
controlled. U.S. stock prices and the U.S. market can be manipulated in a downward
direction, and the SEC doesn’t do its job in watching this because if it did,
there wouldn’t be this “meltdown”. They were the ones who pushed out money to
be loaned by any means necessary – qualifying loans with no money down, no
proof of employment, no credit check.

We saw the little activity of
trade that occurred today. Supposedly, if no decision is made by next week the
stock market is likely to plummet 1000 to 2000 points and eventually will
crash.

That’s just what America needs
right now – FEAR. Instill fear in us and we’ll be willing to listen to anything
the government conjures up. Get us in panic mode and we’ll turn over all faith
to those who created the problem for us to begin with. It’s not like this was
some surprise. Anybody in or related to the mortgage industry could foresee
this doom.

The banks are not yet on their deathbeds. In fact, it almost
seems like we are trying to convince the banks to participate in this plan and
they are currently only likely to sell their poorest quality assets. I feel the
‘administration’ is trying to get something by us before we have a chance to
properly mull it over.

It clearly seems that all the wreckage is getting passed off
to the taxpayers. I think the bailout will force the feds to raise taxes, regardless
of who becomes the next president. There won’t be any money for new programs
and this assures cuts in other programs. Worse, the US debt is never going to
go away.

So what is in this proposed Bailout Plan? It proposes that
there be more regulatory oversight for mortgage lenders. It states
responsibility for regulating insurance companies would gradually be shifted
from the state to the federal level. The SEC and Commodity Futures Trading
Commission should be merged. These new combined agency should engage in faster
approvals of new financial products and rearrangements and clarifications of
current regulatory responsibilities to be implemented.

Whatever that means - all for $700b!

Why doesn’t the government divvy up that money, spread it
equally among every US citizen, let us pay a bill down and give me hope that
the government is really working in the interest of the people.